Downsizing & Pink Slip Management

1. ORGANIZATIONAL DEVELOPMENT 09-11 1

2. WHAT IS DOWNSIZING?
Reducing the overall size
Reduction in number of employees
Pink Slip Management
ORGANIZATIONAL DEVELOPMENT 09-11 2

3. TYPES OF DOWNSIZING
Reduced
workweek
Firing
Job
Transfers
Sharing
ORGANIZATIONAL DEVELOPMENT 09-11 3

4. REASONS OF DOWNSIZING!!
Merging of two or
more firm
Outsourcing Acquisition
When company
Strategy changes
goes at loss
Change in
Economic crisis
management
ORGANIZATIONAL DEVELOPMENT 09-11 4

5. Morale of
Employee Survivors
Loss of Training Relations
investment from
turnover
Performance
Training
Management
DOWNSIZING
& HR SYSTEM Performance
evaluation as a
layoff criteria
Reward
Employment
System
Reputation Compensation
effects on pay & benefits
5
recruitment ORGANIZATIONAL DEVELOPMENT 09-11

6. ORGANIZATIONAL DEVELOPMENT 09-11 6

7. RELIANCE MART
Mukesh Ambani
Hyper market
Third retail format
165000 sq. feet
Range over 95000 products
Over 400 highly skilled employees
ORGANIZATIONAL DEVELOPMENT 09-11 7

8. What Happened @ Reliance Mart
Almost 50% staff removed
2 floors complete shutdown
Customer care service – hopeless
Products are of low quality
Charm of reliance has gone
One the best e.g of downsizing in Ahmedabad
ORGANIZATIONAL DEVELOPMENT 09-11 8

9. REASONS OF DOWNSIZING AT RELIANCE
MART?
Demand decreased
Inflation
Tough competition
Recession
Earn more and more profit
Poor quality
Schemes were not very effective
ORGANIZATIONAL DEVELOPMENT 09-11 9

10. EFFECTS OF DOWNSIZING
Firm’s Reputation suffers
Rethinking of employment strategy
Change in Employee Behavior
Violation of Psychological Contract
Survivors Experience
Early Retirements
Best Employees leaving org.
ORGANIZATIONAL DEVELOPMENT 09-11 10

11. PINK SLIP MANAGEMENT
Pink Slip – refers to being fired or laid off
from one’s job
Cutting cost Mantra – anyone’s head could be
on the block
Causes defiance, antagonism, trauma,
disappointment, frustration, etc.
India – lay offs not common, leads to
psychological tension
Retrenched employees – worried about EMIs
ORGANIZATIONAL DEVELOPMENT 09-11 11

12. NAME OF THE SECTOR JOB LOSSES
Export Sector 30,00,000
Engineering Sector 1,00,000
NAME OF THE COMPANY JOB LOSSES
Air India 15,000 (offer to non-operational
staff)
Jet Airways 1900 (reinstated by the company)
Satyam 1500
Wipro 1000
TCS 500
Patni Computers 400
Kingfisher 300
Virtusa 200
Source: Business World, November 3, 2008
ORGANIZATIONAL DEVELOPMENT 09-11 12

13. PARTICULARS PLC PARTICULARS ELC
INTRODUCTION • Heavy Operational cost INDUCTION • Period of slow performance
• Lot of promotional • Lots of developmental &
activities supporting activities
GROWTH • Product fully accepted DEVELOPMENT • High performance &
• Profit enhancement productivity
realized. • Aiming @ improve
• Sales high & improve knowledge, sharpen skills
revenues & mould attitude
• Less amount of • More Managerial Level
promotional activities
MATURITY • Sales growth decline PROMOTION • Reward & recognition
• Product realized – • Job Enrichment & higher
prospective buyer responsibilities
• Promotional activities • Look for higher tasks
withdrawn • Training play minor role
ORGANIZATIONAL DEVELOPMENT 09-11 13

14. PARTICULARS PLC PARTICULARS ELC
DECLINE RETIRE/ • Gives up work
RETRENCHMENT • Sometimes earlier, early
retirement incentive
plans
• Employee can’t predict
when his life will be end
Recession times – prepare mentally & physically for layoffs
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15. ALTERNATIVES OF DOWNSIZING
Cut back on
Offer Job employee Change Systematic
Sharing benefits work week change
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16. CONTD…
EMPLOYMENT CHANGES IN PAY/BENEFITS
TRAINING
POLICIES JOB DESIGN POLICIES
Attrition Tr a n s f e r s Pay freeze Retraining
Cut overtime
Hiring freeze Relocation
pay
Use vacation &
Cut interns Job sharing
leave days
Vo lu nta r y t im e
- Pay cuts
offs
Reduced work Profit sharing
-
hours or variable pay
ORGANIZATIONAL DEVELOPMENT 09-11 16

17. Associate line managers – retrenchment & retention
strategies
Be voice for employees – find effective solutions
Enhance retained employees
Compensate employees – quality output
ORGANIZATIONAL DEVELOPMENT 09-11 17

18. Knowledge Era – keep updated, have learning attitude
Financial Experts – keep adequate bank balance
B-Schools Today – introduce specialization like lay – off
management or pink slip management
Don’t think why “me”, go for other options, search job sites
of your sector
Consider it as an opportunity
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19. ORGANIZATIONAL DEVELOPMENT 09-11 19